What Is Ecommerce?


Ecommerce is an online retailing practice that lets you sell products online. Unlike physical stores, an eCommerce website lets potential customers add items to their shopping carts and then checkout. The payment method is encrypted and sent to a Payment Gateway, which handles credit card processing securely and remotely. When a shopper completes an online purchase, the website provides a tracking number, an estimated shipping time, and a unique transaction number. These processes are typically automated and part of the website’s core functionality.

One of the biggest benefits of ecommerce is its cost-effectiveness. Electronic commerce allows companies to reduce transaction costs because many of the fixed costs of brick and mortar shops are eliminated. This allows companies to enjoy higher profit margins. Customers can enjoy quick delivery of goods and complaints. Additionally, online shopping allows them to track their orders and track their history. The convenience of shopping through an online store is hard to match! Electronic commerce saves time, energy, and effort for both consumers and businesses.

The growth of ecommerce continues to surpass all predictions. According to the U.S. Census Bureau, ecommerce sales in the third quarter of 2019 totaled $154.5 billion, accounting for 11.2% of total retail sales in the country. And while these figures are very impressive, they’re far from complete. In some regions of the world, smartphone penetration is very low compared to other regions. Other countries, such as the UAE, are expected to experience a similar trend as other countries. The development of ecommerce technology is expected to accelerate as people become increasingly comfortable with their mobile devices.

Payment processing is integral to ecommerce. Most e-commerce software solutions provide payment processing, though some allow users to choose their preferred payment processor. The cost of processing transactions is 2.9% plus $0.30. Once a transaction is completed, the funds are transferred to the merchant’s bank account, which is why it’s important to use a separate business bank account. The ease of transactions and keeping track of sales is enhanced with a separate business bank account.

When creating an ecommerce website, business owners must determine the type of business entity they are starting. The type of business entity chosen has important financial and legal implications. In most cases, ecommerce businesses are formed as a sole proprietorship, general partnership, or LLC. Each of these options has distinct benefits and drawbacks, so it’s best to consult a legal professional before choosing the right business entity for your ecommerce website.

Depending on the nature of your business, you may need to obtain a business license. Unlike a traditional brick-and-mortar business, most ecommerce businesses are home-based and don’t need to obtain a physical license. But most locations require a home occupation permit to show that the business is not adding any conditions that could potentially be problematic. In addition to business licenses, some industries require professional licenses to operate.

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